3 Major Challenges in Franchise Business Every F&B Entrepreneur Must Know!

3 Major Challenges in Franchise Business Every F&B Entrepreneur Must Know

Franchising is a popular business model due to its potential for significant profits and the ease it offers franchisees by eliminating the need to build a brand from scratch. However, running a franchise business is not without its challenges for the franchisor.

1. Business Model and Brand Value

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Before starting a franchise, ensure your business model can be scaled into a franchise. Mistakes in the business model can reduce efficiency and profits. According to NerdWallet, a good business model includes the product sold, marketing strategy, production & marketing costs, and profit generation. Brand value is also crucial; 58% of consumers buy and recommend brands based on their values (Edelman, 2022). The story you tell consumers will attract and retain them.

2. Clear and Executable SOPs

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Clear and detailed Standard Operating Procedures (SOPs) are essential. Written and implemented SOPs across all franchise outlets increase operational efficiency by minimizing verbal communication, boosting worker productivity, reducing chaos, and saving training costs by 2.1-2.4% (Your Retail Coach, 2022).

3. Supply Chain Management

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Proper supply chain management is often underestimated. Inconsistent supply of raw materials can lead to quality issues, resulting in loss of consumer trust and declining sales. Implementing a system like the Close Loop System from ESB Goods can ensure consistent quality by sourcing from the same suppliers. It also helps detect fraud, making franchise management easier.

Addressing these challenges—brand value, SOPs, and supply chain management—effectively is crucial for the success and growth of your franchise. Hopefully, this overview helps you, as a culinary entrepreneur, to continue learning and expanding your franchise business across Indonesia.